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4 ways to finance your van purchase

April 18th, 2017

As we work with finance methods every day, it becomes very easy to assume that everybody knows about each option and the differences between them. Of course, that isn’t the case, so here’s a very brief description of each of the four ways we can offer van finance packages.

HIRE PURCHASE

Capital and interest is combined and the total amount is paid over a series of monthly payments. When all the payments have been made, you then become owner of the vehicle. VAT is not added to the payment instalments, and for both companies and the self-employed, the van is an asset and the interest is tax deductible.

CONTRACT HIRE

This is available only for new vans. You are provided with your van over an agreed period, with the mileage levels being nominated, and any excess being charged per mile. You pay a fixed monthly rental. At the end of the period, the residual value of the vehicle, profit or loss, is borne by the company providing the contract hire. Payments are liable to VAT, but full maintenance, and a relief vehicle, can be included in the package.

FINANCE LEASE

In this case, you buy the use of the van rather than the vehicle itself. The risk remains with the customer and payments are subject to VAT. At the end of the agreement, the vehicle is sold. If at a loss, the customer is liable for the shortfall. With any profit, a percentage is passed on to the finance company.

LEASE PURCHASE

A variant of hire purchase, payments are made in the same way but the initial outlay is lower, as are the monthly payments. The final, agreed payment is made at the end of the agreement. This can be a useful choice where cash flow is an important factor, and tax benefits are as they are for hire purchase.

Which is best to meet your needs and circumstances? Well, each situation is unique, so the best course is to talk it through with our seasoned experts here at M4 Sales.

M4 Van Centre, M4 Minibus Centre, M4 Trade Centre, M4 Select Cars part of the Tom Gallagher Group Ltd.

Registered in England and Wales, registered number: 4279824 | VAT number: 7582 92 492

Registered Office: M4 Service & MOT Centre, Westmead Industrial Estate, Swindon, Wiltshire, SN5 7YT.

We are Regulated and Authorised by the Financial Conduct Authority. Ref no: 665278

We are a Credit broker not a Lender.

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